EDITOR NOTE: Many thanks to subscribers, as the Hat Trick Letter celebrates
its anniversary for 100 months. The business
has exceeded all expectations and dreams.
Deep gratitude is extended to all subscribers,
past and present. Also, a special thanks to
my many friends and colleagues who are part
of several important circles where we share
vital articles, opinions, and stories. They
are critical to research in an ongoing learning
process. And a big vote of gratitude to my
valuable sources who spill extremely important
developments in progress from inside the control
rooms, asking little in return except to get
the word out.

"Gold
is the money of kings, silver is the money
of gentlemen, barter is the money of peasants,
but debt is the money of slaves." ~ Norm Franz

"Monetary
policy by itself is not going to solve our
economic problems." ~ Ben Bernanke (discredited Princeton Univ Economics professor, and Orwellian
student of revisionist history. Yes, Ben,
amplified liquidity cannot overcome insolvency,
but you will ramp it up like Weimar
anyway due to desperation and an empty toolbox.)

"It
is rather obvious. Given that almost half
the reported inputs that help establish the
LIBOR rate are discarded immediately, Barclays
simply cannot have manipulated the LIBOR rate
alone, period. Whats more, to effectively
ensure the rate is set at the price required,
you would need not only to establish the highest
and lowest 25% of prices, but then to ensure
the remaining 50% average out to the required
rate. Based on the fact that there are 16
banks that submit rates, that would mean about
13 of the 16 involved would need to be complicit.
As a very good friend of mine put it earlier
this week. At best this is a cartel, at worst
it is outright fraud on a scale that is completely
unprecedented." ~ Grant Summers (financial author)

"The
device that can bring down the corrupt structures
are the Interest Rate Swap contract and LIBOR
that funds it. The press is focusing on how
LIBOR funds mortgages and simple corporate
swaps, a minor point. The major point is that
the rigged low rate funds IRSwaps to maintain
the official 0% rate against a backdrop of
chronic annual $1.5 trillion deficits and
absent USGovt bond investors. Tiny demand
and huge supply should mean very high rate.
Generally the emphasized topics centered upon
by the US
press are the meaningless." ~ the Jackass

"I
wish I could say I am shocked, because it
is shocking. But regulators have not been
particularly effective or aggressive in the
past two decades of finance." ~ Frank Partnoy (professor at the University of San Diego
School of Law)

"In
doing Operation Twist, the Fed has effectively
doubled their yield curve risk while artificially
rewarding and encouraging the holder of the
longer term maturity. The twisting engineers
at the Fed never tell anyone about the additional
risk they are taking, nor tell anyone that
the outcome of such additionally ensures that
they will never allow rates to increase in
a material sense. It is a confirmation of
Zero Interest Rate Policy forever, and no
exit strategy." ~ Rob Kirby

"Operation
Twist cements ZIRP and closes the door on
any Exit Strategy. It it also ensures a systemic
failure with capital destruction, rising costs,
falling profit margins, deterioration in the
USEconomy, continued speculation instead of
production, growing federal deficits, and
finally a USGovt debt default. The nation
has moved from a permanent housing decline
and lost legitimate income (factory exodus
to China) as principal cause
for systemic failure, to a failure based upon
capital decay and absent profitability. The
USFed in its infinite wisdom has been attempting
to control the rising cost structure by means
of a steady concerted effort to render harm
to final demand through economic damage. They
will succeed and cause the economic recession
to be permanent, caught in its own dowward
spiral with overwhelming momentum. They will
win a USTreasury Bond rally to bring about
the final collapse in a Black Hole. The ensuing
USGovt debt default is written in stone." ~ the Jackass

"Liquidity
does not produce solvency. Bailouts from one
insolvent entity to another insolvent entity
do not produce solvency. Efforts to stimulate
growth will not produce solvency if a large
fraction of the economy is overburdened with
debt obligations that cannot be repaid. What
will produce solvency is debt restructuring.
The best hope is that global leaders will
recognize the necessity and move ahead with
debt restructuring in an orderly way, particularly
in the European banking system. The worst
nightmare is that global leaders will deny
the necessity and belatedly discover that
they have squandered the last opportunity
to avoid a disorderly finale." ~
John Hussman (omitted how US
industrial base dispatched to Asia
removed all potential traction from monetary
policy)

"JPMorgan
Chase is a petri disk for problems to arise.
The Board sees its responsibility as protecting
the interests of management, not share holders." ~ Bill Cohan (former employee of JPMorgan, Chase Manhattan, and the merged
bank entity, including the merger of Bank
One, who also authored a scathing exposure
of Goldman Sachs criminality)

## MONETARY FRAGMENTS

◄$$$ SWITZERLAND WILL DEFY THE USGOVT EMBARGO AGAINST
IRAN
ON OIL SHIPMENTS, AND GO AGAINST THE EUROPEAN
UNION BAN AS WELL. EXPECT A SLOW REBELLION
IN EUROPE OVER COMPLIANCE
WITH THE UNILATERAL BAN SET BY THE USGOVT
WITHOUT UNITED NATIONS APROVAL. $$$

Switzerland announced defiantly that the small
European nation will continue to purchase
Iranian oil. They will not take orders from
the European Union or the USGovt. The sanctions
against the Islamic Republic went into effect
on July 1st. The Swiss Federal Dept of Economic
Affairs issued the formal statement. The
nation made it clear that any decision on
the import, sale, and transport of Iranian
crude oil and petro-chemical products and
their insurance coverage should be made by
the parties to the trade themselves, namely
Switzerland and Iran. Good relations with
Iran
will be maintained. In April, the Swiss Govt
exempted the Central Bank of Iran from the asset freeze as part of EU sanctions
initiated by the United
States in unilateral
manner. On July 1st, a new round of sanctions
directed against Iran, its oil shipments, and its banks went into
effect. My firm expectation is that one by
one, the nations of Europe will break ranks and defy the US-led sanctions. As the European
Union becomes more shaky by the month, their
willingness to follow the US
into chaos and retribution will slip away.

◄$$$ GLOBAL RECESSION IS CONFIRMED WITH A LOUD GONG FROM JAPAN
ON A MASSIVE MACHINE ORDER DECLINE. THEY SERVE
AS THE FACTORY NUTS & BOLTS. CHINESE FACTORIES
HAVE HALTED EXPANSION, PERHAPS EVEN A CERTAIN
DEGREE OF MAINTENANCE. JAPAN
MUST CONTEND WITH A NEW EMERGING TRADE GAP.
ANY BANK OF JAPAN MONETARY RESPONSE WILL
CAUSE PRICE INFLATION, IN VIEW OF ABSENT TRADE
SURPLUSES. TIMES HAVE CHANGED FOR JAPAN.
PREPARE FOR UNBRIDLED PRICE INFLATION IN JAPAN, SINCE EASING WILL BE DONE WITH VANISHED
TRADE AND CURRENT ACCOUNT SURPLUSES. $$$

Japan machinery orders have imploded as
the global economy exhibits extreme recession
signals. The stunning 14.8% decline in
Japan's core machinery orders was five times more
severe than the modest 2.6% drop expected.
The collapse is actually worse than what was
seen in the aftermath of the Fukushima disaster. The macro pain was evident in the massive plunge
by 62.6% in the Current Account surplus.
The C/A deficit was also expected to decline
much less. Rather than blame being directed
at any natural disaster, the finger is squarely
pointed at the global economy in general and
China
more closely. Bear in mind that the impotent
central bank actions of repeated QE bond monetization
ad nauseum has resulted in zero relief. Japan invented QE and proved
it is the painted corner. The trumpets will
blast, but hollow results will come. It must
be time for another QE748, with the result
no different after 22 years of failures.

Hiroaki Muto is senior economist at Sumitomo Mitsui Asset Mgmt in Tokyo.
He wrote, "Machinery orders from both
manufacturers and non-manufacturers fell a
lot. External demand looks weak. Many companies
have turned cautious about overseas economies.
The global economy is weaker than we thought.
Machinery orders suggest capital expenditure
is weaker than what companies indicated in
the most recent Bank of Japan Tankan survey. This
suggests that capital expenditure plans
in the Tankan are likely to be downgraded.
The Current Account surplus took a hit from
imports of liquefied natural gas. Prices for
these imports should start to follow oil prices
lower. There are increasing worries for the
Japanese Economy. The BOJ looked like it would
be on hold this week, but given weak US economic data and monetary easing by central
banks in China
and Europe, there is now a 50% chance that the BOJ could ease this week."
So what? Who cares? No effect will come.

Anyone who believes more QE easing by the discredited Bank of Japan is a monetary
moron and financial ignoramus. To me, this
is the most clear vivid definite evidence
of China slowing. The other offshore
story not told in the West is that Japan moved a considerable amount of factory space
to China.
They produce myriad consumer products, undermining
the Japanese trade surplus. It has been eliminating
over the years, but due to massive inflow
of Asian funds seeking safe haven in Jap Govt
Bonds, the Current Account is still in surplus.
The USEconomy has been in a rigid fierce recession
for over four years. Nothing the Bank of Japan
does will result in stopping the slide. They
have been stuck with 0% ZIRP poppycock for
22 years, stuck in a painted corner. They
are living proof of QE doing nothing to fix
the constipation, made worse in an era with
Chinese competition.

The key to comprehension is the Chinese competition. A nasty asterisk can be
put on the upcoming central bank actions.
Any BOJ monetary response will result in
direct price inflation, since the current
account surplus has largely vanished.
Their new money is not to go to cover banker
black holes like in the United States to feed the derivatives. It will
go to cover capital leakage in trade at a
time when their federal deficit is a huge
portion of their domestic economy. Any BOJ
easing will be pure bond purchase, to cover
their own federal debt. See the Zero Hedge
article (CLICK HERE).

◄$$$ OBAMACARE AGENTS WILL COST $1.3 BILLION FOR ENFORCEMENT. WELCOME
THE HEALTH CARE GESTAPO, A VAST CREW OF AGENTS.
THE BENEFITS WILL BE ILLUSORY IF THEY EXIST
AT ALL. CALL IT MYOPIC JOB GROWTH. $$$

Maine Governor Paul LePage blasted the Supreme Court decision to enforce ObamaCare
as the law, thus approving a $500 billion
tax increase as part of the program. He called
the 16,500 new IRS agents hired to enforce
the tax the New Gestapo. Some quick arithmetic.
With average salary & benefits of $80
thousand, the new 16,500 Healthcare Gestapo
agents will cost US taxpayers an additional
$1.32 billion. But those count as job growth
in the USEconomic recovery. The nation has
promoted, fostered, and built a deep dependence
upon the state, but that is precisely what
the Fascist Business Model is all about, merger
of state and large business. Some critics
call the ObamaCare program the TARP for the
insurance sector benefit. See the Silver Doctors
article (CLICK HERE)
and the Yahoo News article (CLICK HERE).

A reported hidden provision in the health care program might be an implanted
RDIF chip in the upper arm, but confirmation
is difficult to achieve. The elusive national
ID pursuit continues toward Big Brother.
My perception is that health care will control
decisions not to deliver care, and to manage
death in many cases. Some prudent policy might
come. The poor might no longer clog the Emergency
Room facilities of most inner city hospitals.
The Obama Admin is credited with increasing
the USDept Treasury agent staff by a 30-fold
increase. They are fanning out across the
world searching for ex-patriot bank accounts
and gold purchase trails. They confiscate
accounts, seize the funds, arrest the individuals,
and place a large hole in the passports. Quite
the benefit when burden of proof is on the
citizen, since it is ignored. This is not
progress toward a stable nation. It is Nazi
in purity. At least five such cases involving
friends of friends and colleagues have been
passed on.

◄$$$ LATIN AMERICA IS MAKING DISTANCE NOTICEABLY
FROM THE UNITED STATES. THEY ARE MOVING TOW
ARD CHINA
AND RUSSIA WITH HANDSHAKES AND
EMBRACED TRADE. KEY TECHNOLOGY IS BEING PROVIDED
BY RUSSIA, BUT BIG PROJECTS AND TRADE DEALS ARE BEING
BUILT BY CHINA.
THE US-GOVT
EMPHASIS ON DRUG CONTROL AND BANK CONTROL,
RATHER THAN TRADE, IS CAUSING A BACKLASH.
$$$

The regional summits are institutionalized gatherings of the heads of state
and government of the Western Hemisphere where
leaders discuss common policy issues, affirm
shared values, and commit to concerted actions
at the national and regional level to address
continuing and new challenges faced in the
Americas. That is the stated agenda. Recently,
a summit took place for the Organization of
American States in Cartagena
Colombia. The mid-April conference was a disaster.
The Hat Trick Letter reported on the details
like divisions over Cuba
inclusion. Other divisions were clear, like
over socialist concerns. The USGovt leader
Obama was virtually snubbed.

My sources tell of solid momentum by many Latin American nations in developing
ties with China and Russia that has accelerated. They are making
distance from the United States, seen as a bully, replete with corruption
in banking, and owner custodian of the USDollar
which has rendered harm to their nations.
The Chinese are busy building trade ties and
swap facilities that enable barter trade.
The Russians are busy sharing technology and
installing consumer telecom networks. In the
last decade, tremendous pressure and bully
tactics were used to declare online gaming
websites illegal on Caribbean and Central
American soil, an extension of US jurisdiction on the grounds
that American citizens were participating.
The resentment went deep. Ulterior motives
were at work, related to the massive online
transactions of other underworld types.

## LIBOR SCANDAL BLOOMS

◄$$$ AS PREFACE TO THE ENTIRE L.I.B.O.R. SCANDAL STORY, THE OBSERVER MUST
NOTE THE FIRM PATTERN. THE LONDON INTERBANK OVERNIGHT RATE IS ESSENTIALLY
THE FEDFUNDS RATE WITH NOISE. BY PROXY ANY
LAWSUIT ABOUT TEAM-LIBOR WILL BE AN ATTACK
AGAINST THE US-FEDERAL RESERVE. THE TWO RATES
ARE INTERCHANGEABLE. $$$

Expect the path of legal torts to end up at the USFed doorstep, and the Bank
of England also (its master). The bankers
must fund all their insane props with free
money, the prop machinery that supports the
entire crumbling financial structures.

◄$$$ THE FINANCIAL TIMES CONFIRMS THE MANIPULATED LIBOR RATES AND INTEREST
RATE SWAPS. THE HIGHEST LEVELS OF BRITISH
BANKING IS COMPLICIT IN THE L.I.B.O.R. PRICE
RIG SCANDAL. THE BRITISH BANKERS ASSN LIED
ON NUMEROUS OCCASIONS, AND HAS BEEN EXPOSED.
INTRIGUE HAS ENTERED THE PICTURE, AS THE BANK
OF ENGLAND IS AT RISK. THE POWER OF THE HIGH EUROPEAN
CASTLES IS UNDER SIEGE. $$$

For a preliminary opening salvo to come up to speed, check the Financial Times
article (CLICK HERE)
from the heart of London
itself. The dam is breaking on the big banks
and their incredibly deep corruption that
touches several types of markets, from derivatives
to mortgages to credit cards. One can detect
a global imprint to the investigation so far
underway, as jurisdiction issues are evident.
No nation has claimed sovereign jurisdiction
in the cases, which have crossed borders from
Great Britain to the United
States to Germany
and to Japan.
Mention of the Serious Fraud Office indicates
involvement by the World Court in the Hague. All major financial centers are
involved. The authority is global, and the
sheriff wears a global badge, a topic not
yet discussed anywhere. This is an endgame
factor. The Western banking corruption is
the target. The authority is as high as it
goes. Some claim the Western castle dwellers
are bringing down the system, burning the
financial houses, in order to install a new
system with centralized powers in the London
and Swiss castles. Not so clear, not so sure.
My suspicion is that the badges bear the same
marks as those powerful entities in the East
which have claimed over 6000 metric tons of
gold bullion from the cartel banks since March.
The delivered shipments of gold did NOT go
to London and Swiss castles,
but to Asia!! Besides,
the pattern has been de-centralized activity,
the opposite for the fascist monolith power
centers.

The Slog does outstanding work in sifting through the confusion. He summarized
well the incredibly deep corruption in London
banking. He wrote, The idea that LIBOR
as generated by banks reporting estimate rates
on a best guess basis to the British Bankers
Assn, has been a standing joke in the industry
since about mid-2007. As the now old joke
runs, 'LIBOR IS THE RATE AT WHICH BANKS USED
TO PRETEND THEY WOULD LEND TO EACH OTHER.'I
remember working on transactions in 2008 where
some of the smaller UK banks or building societies
would borrow on a secured basis at rates of
around LIBOR+2% or +3%, which is obviously
absurd if LIBOR is the rate that banks are
supposed to lend to each other on an unsecured
basis. After mid-late 2007, banks largely
stopped really lending to each other on an
unsecured basis. In the terminology of
the industry, the inter-bank market froze
up. It remains largely frozen across Europe
to this day. In this context the banks and
the BBA had a challenge on how to report LIBOR.
To admit that this freeze-up had happened
would risk a credibility crisis, bank runs,
and more, as the media caught on the the scale
of the crisis which, at this point, everyone
was trying to ignore. So the banks and the
BBA chose (or were told, maybe) to keep reporting
LIBOR as if everything was alright, business
as usual, even though it was essentially un-anchored
from the real world. The British Bankers Association
(BBA) denied any [manipulation], stating that
the BBA OBSERVES RIGOROUS STANDARDS IN OUR
SCRUTINY AND GOVERNANCE OF THE LIBOR MECHANISM,
AND WORKS WITH THE INDUSTRY TO ENSURE THEIR
CONTINUED FULL CONFIDENCE IN ONE OF ITS MOST
ACCURATE AND RELIABLE BENCHMARKS. But in
the four years since, the world at large has
grown up bigtime about this kind of denial
bollocks. Indeed. Or again put another way,
the BBA release was a catalogue of lies from
start to finish."

◄$$$ THE L.I.B.O.R. SCANDAL HAS CROSSED THE ATLANTIC
TO REACH BOTH JPMORGAN AND CITIGROUP. EXPECT
SOME EFFECTIVE DEFLECTION OF THE PRESSURE.
THE CONTRASTING TREATMENT OF LONDON
BANKS TO NEW YORK BANKS WILL MAKE GREAT THEATER.
THE CASES INVOLVE ACTIVITY IN JAPAN BY CITIBANK. THE LAWSUITS
ARE STACKING UP. THE US-PRESS ATTENTION DIRECTS
FOCUSED ATTENTION ON LONDON.
$$$

The French press reported that the LIBOR investigations have hit the doorstep
of both Citigroup and JPMorgan Chase, as requests
for information have been given to them in
preliminary probes. The financial market reaction
has hit those bank shares, along with those
of Bank of America, as heavy imposed fines
are feared. Barclays has been fined $452
million by British and US regulators for manipulation
efforts in the LIBOR and EUROBOR benchmark
interest rates between 2005 and 2009.
Perhaps a key to understanding the enforcement
is that the Serious Fraud Office is a division
of international investigation from Interpol
and the World Court. Suspicion of the new sheriff in town grows. The purity
and sanctity of the London banking sector has been lost, as the tarnish is applied with
a broad brush. Citigroup and JPMorgan also
acknowledged private civil and class action
lawsuits filed against the LIBOR related banks
in April over the issue. The lawsuits have
been assembled together into one action put
before the New
York federal district court. At risk is
potentially many $billions in claimed higher
improper costs paid, cited in lawsuits for
damages. Since the rate device is so widely
used, the damages could actually reach the
$trillions. That is when the Too Big To
Fail card is to be played again, since legal
tort enforcement would bring down the US bank kitchen where the books are cooked.

The LIBOR rate is set based on information from 16 international banks, which
means collusion is obvious, not only implied.
The rate is the work of the group of banks
working together, dropping the highest and
lowest, and settling on a consensus. The final
rate is an average of claimed cost for funds
in London's
interbank market. They lied egregiously,
and pocketed small differences off $trillions
in volume. It is a group process and effort,
therefore collusion is blatantly clear. The
sheriff went after the most vulnerable team
effort of banking corruption in LIBOR and
EUROBOR. Also, these funding rates dictate
the cost for numerous derivatives that go
unregulated, and mortgage rates for a damaged
housing market, and credit card rates for
a struggling household sector. Therefore,
the Interest Rate Swaps and other bond control
mechanisms will be undermined. The damage
could continue for many months during a grand
unraveling of bond markets and corrupted mechanisms.
Commercial and retail borrowers around the
world are affected. JPMorgan, Citibank, and
Bank of America are three of the 16 banks
that fix the rate. They will attempt to deflect
the scrutiny, but the prosecution pressure
is one level higher than single nations. My
hope is that the higher jurisdiction authority
is revealed, as is their agenda. The US
banks have for years operated with impunity,
but from US prosecution of fraud, theft,
and misrepresentation. The new sheriff at
work appears to wear a global badge, carry
more clout, and push around the bank cartel
executives. This is very new!

The case of Citigroup involves activity in Japan
with the TIBOR, the Euroyen Tokyo interbank
rate. This scandal is indeed global. The emergence
of a face on the global prosecutor team will
be intriguing to observe. Administrative action
against the Citigroup Global Markets Japan
unit has been taken by the Japanese Financial
Services Agency, working in conjunction with
several cross-border regulators involved in
the investigations. Two traders at the Citigroup
office in Tokyo
are at the center of rate fixing regarding
LIBOR and TIBOR, focus given to certain communications
made. Their activity was suspended back in
January without much publicity. The Japanese
Financial Services Agency took administrative
action against Citibank Japan for the rate fixing actions. See the Raw
Story article (CLICK HERE).
Not much coverage of the offshoot cases appears
in the US press, only the London cases. This is precisely the kind of slant the Jackass expected
a month ago with Europe blamed and even sabotaged
in order to deflect attention from the US banks, corrupt to the core. London is the initial focus, but it will spill
onto US soil.

◄$$$ THE L.I.B.O.R. SCANDAL HAS REACHED GERMANY'S
LARGEST BANK. DEUTSCHE BANK HAS ENTERED THE
PROBE AS AN OBJECT OF THE PRICE RIG SCANDAL.
THE BIGGEST GLOBAL BANKS ARE ALL IN COLLUSION,
NOT JUST OVER RATE SETTING, BUT OVER BOND
FRAUD AND GOLD FRAUD. ACTION AGAINST THE L.I.B.O.R.
SHOWCASE IS THE CROWBAR THAT BRINGS VIEW ON
THE ENTIRE ASSORTMENT OF BANKER CORRUPTION.
$$$

German markets regulator BaFin is conducting a special probe of Deutsche Bank
as part of a wider investigation into possible
manipulation of the London InterBank Offered
Rate (LIBOR). The German regulator only admitted
to investigate possible manipulation of LIBOR
rates by domestic banks. Since a big team
player, D-Bank is suspected by those with
active brain stems. Results from the probe
are expected to emerge in mid-July. The
investigation in Germany
is a special probe initiated by the regulator,
which carries much more weight than routine
probes initiated by a third party such as
a bank. The giant German bank has received
various subpoenas and requests for information
from certain regulators and governmental entities
in the United
States and Europe,
in connection with setting interbank offered
rates for various currencies. That means LIBOR,
EUROBOR, and TIBOR. The spotlight, scrutiny,
and pressure is global, which indicates a
clear global hand like with a new sheriff.
See the Reuters article (CLICK HERE).
The little Metzler Bank is also suing D-Bank
over corrupt LIBOR practices.

◄$$$ ROB KIRBY LINKED BACK IN 2008 THE USFED & JPMORGAN TO THE L.I.B.O.R.
MARKET PRICE RIGGING. THE US-BASED REGULATORS
HAVE BEEN AWARE OF THE CORRUPT PRACTICES FOR
FOUR YEARS. THIS IS NOT A NEW PRACTICE, ONLY
A NEW PROSECUTION. $$$

If truth be told, the LIBOR anomalies have persisted since late 2008. The intrepid
first class forensic bond analyst Rob Kirby
linked the sordid trails and mismatched discrepancies
of the LIBOR to the JPMorgan monster, the
US Federal Reserve syndicate ring leader,
and the USDept Treasury haven for Goldman
Sachs lieutenants. Regulators have done nothing
for four years, sitting on their hands, taking
orders from the bank cartel, bowing when required.
See his 2008 article on Financial Sense (CLICK
HERE).

◄$$$ THE SEQUENCE OF FINANCIAL SCANDALS MUST BE NOTED. IT IS DIFFICULT
TO DISCERN EXACTLY THE FORCES BEHIND THE SEQUENCE
OF CASES, BUT THE CHAIN OF DOMINOS ON EFFECTS
IS INTENSE AND BLATANT. THIS CHAIN WILL CONTINUE
FOR MANY MONTHS. $$$

The scum channel is full. The exposure is glaring. The fan to distribute shame
is revved up. The scandal is widening. The
pressure is mounting. The corrupt bankers
have never been on the defensive this much
in the modern era. Their most vulnerable points
are under attack. Big damage is done. Event
#1 was MFGlobal. Event #2 was JPMorgue losses
tied to IRSwaps. Event #3 is LIBOR price rigging.
They are all related, from vast insolvency
and illiquidity that built over three years
time. Other events will come, only later to
discern their connection to the sequence.
Maybe event #6 will be Gold Allocated Account
raid scandal. This deadly chain all began
with Lehman Brothers, whose killjob involved
a pure skate on the deeply corrupt and mischievous
activity by CEO Fuld that should have resulted
in a gigantic scandal in 2009 and 2010. In
truth, event #0 was the TARP Fund and the
$700 billion gift never fully scrutinized
or prosecuted for its fiduciary violations
and extortion angles. The events will continue
to occur in a sequence, probably managed much
more than we are told. The assured direction
is for dismantling the Western bankers and
their historically unprecedented corruption
and magnificent protected profiteering.

◄$$$ THE BIG US-BANKS WILL BE PAYING OUT AWARDS IN NUMEROUS TYPES OF LAWSUIT
CASES. EARLY SETTLEMENTS WILL ONLY ENCOURAGE
MORE CASES. LAWSUITS WITH US-CITIES IS WORKING
ITS WAY ONTO THE LEGAL DOCKETS FOR THE COURTS.
APART FROM LAWSUITS BASED UPON MORTGAGE RATE
CASES, MANY CITIES ARE AGGRIEVED FROM THEIR
SWAP CONTRACTS. EXPECT HUNDREDS OF LAWSUITS,
MAYBE NOT CLASS ACTION, WHICH WILL GIVE MORE
EMPHASIS CASE BY CASE. THE ENTIRE ADJUSTABLE
RATE MORTGAGE MECHANISM IS BASED UPON L.I.B.O.R.
PRICES. EXPECT THOUSANDS OF LEGAL CLAIMS AND
HUNDREDS OF CLASS ACTION CASES. THE PUBLICITY
WILL BE ENORMOUS. $$$

The big US banks are lined up like ducks at a carnival
shooting gallery. They are still reeling from
legal rulings against their mortgage bond
misrepresentation and home foreclosure contract
fraud. Losses will mount quarter after quarter
for perhaps a few years. The losses could
eclipse those from mortgage bond fraud cases.
The city of Baltimore has prepared lawsuits involving interest rate swaps and LIBOR
against notable Wall Street firms like JPMorgan,
HSBC, Bank of America, Credit Suisse, and
Deutsche Bank. The parade has just begun.
See the Baltimore
Sun article (CLICK HERE).
Meanwhile, on the Left
Coast the City of
Oakland California has told Goldman Sachs
to drop dead regarding its Interest Rate Swap
contract payments. Oakland
has been losing $4 million per year, as a
result of an interest rate swap deal they
made with the venerable syndicate firm. Now
the city wants out, but the penalty is $15
million. The city council has decided to terminate
all business with Goldman and renege on the
exit clause cost, daring the firm to make
a public spectacle, which would surely include
scrutiny and an underlying layer of filth.
Expect many other municipalities to follow
the Oakland route. See the Naked Capitalism article (CLICK HERE).

The moment Barclays announced its $450 million LIBOR settlement, the lawyers
moved into action. The precedent was set in
stone. The task of proving LIBOR fraud will
be much easier, but not automatic. A big plaintiff
feeding frenzy could ensue. The 900,000
outstanding US home loans indexed to LIBOR were originated
from 2005 to 2009, many of which were adjustable
rate mortgages. The key lending gauge
may have been rigged, resulting in mismatched
risk. Those mortgages carry an unpaid principal
balance of $275 billion, according to the
Office of the Comptroller to the Currency.
The potential for lawsuits is vast.

The US states will be lining up in a parade also.
State attorneys general are examining whether
banks manipulated benchmark international
lending rates that harmed their states, which
could open a new front against the top global
banks. At issue is jurisdiction over the banks.
Numerous state agencies are lining up also.
The Massachusetts Dept of Transportation is
reviewing its portfolio to look for underpayment
on its bonds. See the Zero Hedge article (CLICK
HERE)
and the Financial Times article (CLICK HERE).

The financial press seems unaware of the great potential for lawsuits globally
in several areas, like those cited above but
also credit cards. The hidden lawsuits might
be for banks who were victimized by the LIBOR
rates paid in derivative contracts, which
is in the Jackass view the biggest motive
of all for the fraud. The volume of derivatives
is an order of magnitude greater than all
the mortgages and government agency bonds
plus bank credit cards. Refer to the colossal
Interest Rate Swaps that support the entire
USTreasury Bond tower, funded by the cheap
LIBOR rate. The bankster gangsters wanted
to limit their payments on derivatives and
fund their own derivatives for free.

## BANKS & JPMORGAN CRIME CENTER

◄$$$ A COMMON DEFENSE IS HEARD THAT THE JPMORGAN LOSSES ARE MINOR AND
NOT INDICATIVE OF LIQUIDITY STRESS. BOTH ARGUMENTS
ARE WRONG AND DESPERATE LIES. THE LOSSES ARE
MULTIPLES GREATER. THE LIQUIDITY STRESS MOTIVATED
THE MFGLOBAL ACCOUNT THEFTS, AND NEXT THE
PFG-BEST THEFTS. $$$

JPMorgan Chase lies at the heart of most corrupt schemes. They are deeply tied
to the colossal short manipulation in Gold
& Silver markets, the Interest Rate Swap
devices to defend the USTreasury Bond complex
and its unjustified 0% cost. They are deeply
tied to the mortgage bond misrepresentation
with accompanying investor lawsuits, the robotic
mortgage contract fraud, and much more. They
undoubtedly had a big hand in the looting
of Fort
Knox during the Clinton-Rubin
Admin. They manage the silver price suppression
almost singlehandedly with the corrupt SLV
exchange traded fund. They sit at the apex
of the Fascist Business Model to form a financial
crime syndicate, one of the largest in the
world outside the Bank of England and its
many lord vassals.

JPMorgan operates the Export Bank of Iraq,
the clearing house for Afghan narcotics and
payments. Keep in mind that 70% of all narcotics
that enter the United
States comes from Afghanistan,
as opposed to 6% ten years ago. Also, in the
infamous Building #7 in Lower Manhattan on
911, many records were kept for JPMorgan regarding
Enron deals for offshore companies and for
the $2.3 trillion in additional counterfeited
USTBonds sold over and above USGovt issuance.
JPM at one time had sold twice as many USTBonds
than were issued, much like Italy with duplicate serial numbers. It will be
interesting to watch the demise of JPM and
the potential prosecution of its executives.
If not, observe how many of their upper staff
go missing. See the Jackass article entitled
"Exposure of Banker Corruption"
on Gold Seek (CLICK HERE), which
a couple of my favorite website editors refused
to publish.

To the contrary, the JPM losses are between 10 and 100 times larger than the
figures tossed around. Their Interest Rate
Swap losses alone in failed defense of the
USTBond will go higher than $1000 billion,
as in $1 trillion. Expert estimates already
have them surpassing the $100 billion mark.
Lastly, JPM suffers from grand liquidity distress.
As with Greenspan, listen to the topics, not
the denials. Their cash shortage and profound
insolvency will lead to numerous thefts. Another
MFGlobal event has occurred, with JPMorgan
as the custodian. The PFG-BEST brokerage firm
has its owner sit as regulator.

◄$$$ THE JPMORGAN LOSS IS ESTIMATED NOW AT $9 BILLION, WITH MORE EXPOSURE,
MORE DETAILS. IT WILL FLY PAST THE $100 BILLION
MARK BEFORE TOO MANY MORE QUARTERS. THE GREAT
UNWIND IS NOT POSSIBLE EASILY IN THE ILLIQUID
DERIVATIVES MARKET. VULTURES OPPOSE THE JPMORGAN
POSITIONS, COMPOUNDING THE LOSSES. THE COLOSSUS
BANK OPERATES WITH IMPUNITY, CRUSHING RIVALS,
EXPLOITING SITUATIONS, BUT HAS SUFFERED MASSIVE
LOSSES WITHIN ITS HIGHLY ILLEGAL ROLE OF GAMBLING
WITH DEPOSITOR ACCOUNTS TO SAVE THE SYSTEM.
$$$

JPMorgan is trying to manage a staggering derivatives loss. The Jackass called
it $18 billion in mid-May, almost two months
ago. When $trillions are involved, the realized
loss when things go bad are never only a couple
$billion. The latest is that insiders (possibly
not happy with the Morgue) have revealed the
losses will in time exceed $9 billion. At
center stage is the CIO mansion with IG9 and
DV01 contracts, highly illiquid contracts
in the murky derivative arena that goes unregulated,
by design. The New York Times has leaked the
higher loss estimate, using the word bungling
after CEO Dimon used the word stupid. The
bonus for Bruno Iksil (aka The Whale) is not
to come. The NYTimes wrote, "The bank's
exit from its money losing trade is happening
faster than many expected. JPMorgan previously
said it hoped to clear its position by early
next year. Now it is already out of more than
half of the trade and may be completely free
this year." Once more the financial
media has deceptively reported on the story,
since they stated that JPM has fully unwound
its trade, either by novating, or by transferring
it over to helpful hedge funds. The loss will
grow and grow and grow.

Expect Dimon to pull strings and finagle on the next quarterly earnings report,
using slippery masking techniques like as
Debt Value Adjustments on their corporate
debt, and raids on Loan Loss Reserves, for
what is left of it. Losses are pushed to past
quarters so the current quarter looks better.
Mark Williams is Finance professor at Boston University,
who also served as a Federal Reserve bank
examiner. He assessed, "Essentially,
JPMorgan has been operating a hedge fund with
federal insured deposits within a bank."
That is downright illegal, but in the Fascist
Business Model framework, the big bank can
do anything it wants, including steal private
accounts. See MFGlobal and now PFG-BEST. See
the Zero Hedge article (CLICK HERE)
and the New York Times article (CLICK HERE).

◄$$$ YET ANOTHER NEW FRAUD INQUIRY HAS COME AS MORE JPMORGAN LOSSES MOUNT.
THEIR CREDIT CARD DIVISION COULD SUFFER A
$7 BILLION LOSS. IN THE ROOM ADDITIONS, THEIR
MORTGAGE DIVISION HAS A $8 BILLION LOSS OVERHANGING
LIKE A ROTTEN ROOF FROM MORTGAGES THAT STOPPED
PAYING, SCOFFED BY HOMEOWNERS WHO SMELL A
RAT IN THE LOFT. $$$

JPMorgan Chase disclosed last week that losses on its botched credit gambles
could escalate. Over $7 billion could result,
after it was learned that its traders may
have intentionally tried to obscure the full
extent of loss from the disastrous trades
in the securitized bond market. Proper
accounting efforts (laughter?) led the company
to put its Q1 earnings under doubt. When deemed
reliable they would be restated. Federal regulators
are examining whether traders of the colossus
bank by assets exempted by law intended to
defraud investors. Another ugly lurking loss
comes from a source that is hardly new. It
is the stinking nest of rats in the loft from
the mortgage division. An army of homeowner
clients has stopped payments on $8 billion
in home loans. They will mostly go to foreclousure,
unless the titles declared to be falsified.
The losses will range from liquidation value
to complete from fraud and court ordered loan
forgiveness.

Mastermind CEO Jamie (the Demon) Dimon is on the case to contain the fallout.
Maybe the nation will see a repeat episode
of Dimon before the USCongress, where they
will again kiss his ring and genuflect before
him, putting aside their role to represent
the citizenry. In time the JPMorgan Board
will seek to sack Dimon in an attempt to appear
responsible, then to blame him for most of
the bank's problems, losses, and shame. So
JPMorgan is not the best in class. Dimon had
been working overtime to prove that any flaws
in risk management were limited to the Chief
Investment Office, no longer an obscure office
in London with tentacles
to New
York. Risk controls are in focus, but if too
much scrutiny is given, the facts behind their
support of the 0% FedFunds policy and their
support of the sub-2% USTBond will be revealed.
That scandal comes another day, the Interest
Rate Swap machinery scandal and the false
flight to safety in USTreasury Bonds. See
the New York Times Dealbook article (CLICK
HERE).

◄$$$ AS THE FINANCIAL WORLD TURNS, IT IS ROCKED AGAIN BY ANOTHER FUTURES
BROKERAGE THEFT. THE DEED BECAME NECESSARY
TO KEEP JPMORGAN THE HUNGRY CORNERED MONSTER
ALIVE. LOOK FOR PFG-BEST CLIENTS NOT TO RECEIVE
DELIVERY OF GOLD & SILVER CONTRACTS. INSTEAD,
LIKE WITH MF-GLOBAL, THEIR ACCOUNTS HAVE VANISHED.
ONCE MORE, JPMORGAN IS CUSTODIAN OF THE PFG-BEST
FOREX CURRENCY ACCOUNTS. ALL SUSPICION FOR
THE THEFT IS WITH THE COLOSSUS. $$$

Enter Peregrine Financial Group and BEST-Direct, which merged to become PFG-Best.
The names are different, but the story is
amazingly similar to the MFGlobal heist that
was permitted and protected by the USGovt
and US regulators. In December, they called
a brokerage bust a financial firm failure,
in order to put clients last in line (enabling
pilferage), in direct violation of US law. Clients in a brokerage bust are put first
in line for preserved accounts. No matter
though, since JPMorgan is exempt from the
law. Lawsuits have not yet sorted out in the
courts, the trail far from cold, when another
case of theft and vaporized segregated accounts
has occurred. The new PFG-Best client account
vanishing act has come with the CFTC finding
no material breaches of customer funds protection
requirements since January, the procedures
in place to assure integrity. At the scene
of the crime once more is the same custodian
for the PFG-Best foreign exchange FOREX accounts,
none other than JPMorgan! Look for the
venerable giant JPMorgan to discover another
$400 million in mysterious profits or precious
metals deliveries soon from a murky source.
They were prominent (to say the least) in
the MFGlobal case, implicated as the thief.
In fact, JPMorgan realized a sudden silver
delivery after the MFG theft almost exactly
equal to the size of the requested Notices
for Delivery by the MFG clients whose accounts
were stolen. The Hat Trick Letter reported
the story in detail. US authorities are still
looking for the money, like Keystone Cops.
MFG clients have still not be reinstated on
account loss from pilferage, despite the public
story of 60% restitution. The Jackass has
a colleague who was a victim. He has seen
not a dime, nor does he know of anybody who
has.

As the wheels of crime turn, the National Futures Assn and other officials have
put all PFG-Best funds on hold, where only
liquidation of accounts is permitted, with
their clearing house Futures Commission Merchant.
No clients are able to trade except to sell
out of positions. Until further notice, PFG-Best
is not authorized to release any funds. A
story has come that one such PFG client had
moved his account several months ago from
MFGlobal to seek safety. Ironically, his account
remains frozen under the PFG crime tent, apparently
safe and apart from the victims. He must be
both angry and happy. PFG-Best plans several
hundred layoffs.

The same drill. Segregated accounts at PFG-Best have been raided. After
the MFGlobal fiasco, they were supposedly
made safer. Not so! No solutions come to the
US financial system, only
whitewashes and continued thefts. The regulators
were put on the spot in the aftermath. But
the regulators at the CFTC, the SEC, and the
CME assured such an event would never happen
again. Wrong! The Jackass warned of its inevitability.
Ann Barnhardt warned all to exit such futures
brokerage accounts. The National Futures Assn
has filed notice prohibiting PFG-Best from
operating further, thus freezing all of its
accounts. Their public statement read, "On
July 9, 2012, the NFA made inquiry with US
Bank and learned that rather than the $225
million that PFG had reported as being on
deposit at US Bank just days earlier, PFG
had only approximately $5 million on deposit
at US Bank." The translation is simple,
that another $220 million in segregated accounts
had been stolen, the Modus Operandi looking
strangely familiar to the trails left behind
by Jon Corzine and MFGlobal. See the Zero
Hedge articles (CLICK HERE
and HERE).

The events have a progression, with money in accounts vaporizing:

On or about June 29, 2012 the firm PFG reported to NFA that it had approximately
$400 million in segregated funds, of which
more than $225 million were purportedly
on deposit at US Bank.

On or about July 9, 2012, the regulator NFA received information indicating
that PFG's Chairman may have falsified bank
records.

On July 9, 2012, NFA made inquiry with US Bank and learned that rather
than the $225 million that PFG had reported
as being on deposit at US Bank just days
earlier, PFG had only approximately $5 million
on deposit at U.S. Bank.

Due to all the stress, Russell Wasendorf attempted a suicide at the firm's Iowa compound. He is part of the criminal deed. The PFG-Best brokerage
located in Cedar
Falls Iowa had about
$400 million in customer segregated funds
at the end of April, but now is frozen. Wassendorf
sits on the NFA advisory committee, which
regulates his own firm. Seems on its face
to be a conflict of interest. See the Silver
Doctor article (CLICK HERE).

Much confusion exists around the PFG Best disaster concerning the timing of
events. From withdrawn salary cuts at the
firm to liquidation-only orders to forced
liquidations after the yellow tape showed
up to make a formal crime scene, the sequence
is dizzying to be sure. It was not the least
surprising to the Jackass, who has forecasted
numerous times for the next chapter of the
great vanishing act in private accounts. Rick
Santelli of CNBC provided a vivid shocking
insight into the MFG replay. He said, "We
are just hearing rumors. It could be, on a
percentage basis, worse than MFGlobal."
The entire case actually smells worse than
the MFGlobal crime scene. Not all that shocking,
since USGovt legal teams did more to cover
up the MFG case and to protect its JPMorgan
criminals than to protect against the next
account pilferage case. For a rich rendition
of the sequence of events, follow Rick Santelli
at the Chicago Pits (CLICK HERE).

◄$$$ ANOTHER MFGLOBAL CASE WITH SIMILAR FINGERPRINTS. PFG-BEST AND $220
MILLION IN ACCOUNTS ARE GONE, A SMALLER SIZE
THAN MFGLOBAL. PROBABLY IDENTICAL MOTIVE FOR
THEFTS, INABILITY TO MEET COUNTER-PARTY OBLIGATIONS.
JEFFERIES IS IN CHARGE OF THE LIQUIDATION
OF THE PFG POSITIONS IN ACCOUNTS. WATCH THAT
ACCOUNT THAT HOLDS THE PROCEEDS FROM SALES.
$$$

The MFGlobal playbook has proceeded with another re-enactment. Liquidation of
private accounts has been done in an orderly
manner. No losses are to come to Jefferies,
which will keep the PFG liquidation proceeds
in a segregated account. Segregated from whom
or what? Jefferies confirmed that it has a
clearing relationship with Peregrine Financial
Group regarding trading positions held on
behalf of PFG clients. The event kicked into
gear when PFG was unable to meet a margin
call issued by Jefferies, made in response
to National Future Assn's Member Responsibility
Action. Thankfully, the Jefferies crew have
acted expeditiously in a fair and reasonable
manner. All can rest from that worry (puke).
See the Zero Hedge article (CLICK HERE).

A veteran Chicago futures trader pitched in. He was a victim at MFGlobal. He
wrote, "The CFTC and NFA stepped aside
and let it go into an SEC looting exercise.
My response was that all regulators and banksters
were complicit in MFGlobal. They all stepped
aside and threw 35,000 commodity customers
into an SEC bankruptcy in order to save at
most a few hundred stock accounts. Those were
probably almost entirely employees of MFGlobal.
This is just another blowup which we all knew
was coming. Here is the key to motive. The
halt came, the freeze came, the accounts vanished,
because what they are holding are obligations
with counter-party risk that could not be
met." In time the types of trades
halted will become known, with a suspicion
of gold & silver positions. Probably many
grains, soybeans, and other agricultural contracts
were in the mix, given the Iowa
location. Instead of completing a raft of
trades that might have exposed a COMEX default,
the same JPMorgan master bank simply pilfered
the accounts in an MFGlobal redux. Let's see
how the financial press treats the case. My
guess is the story will be snuffed out as
best as possible.

◄$$$ JPMORGAN IS COMPLICIT IN VATICAN BANK MONEY
LAUNDERING. JPMORGAN PERMITTED THE EUR 3 BILLION
FLOW BEFORE ASKING QUESTIONS IN A MANNER THAT
INDICATED IT WAS TRYING TO MAKE A FALSE FRONT
OF PROPRIETY. BOTH MILAN ITALY AND FRANKFURT
GERMANY
ARE INVOLVED AS LOCATIONS. $$$

No financial institution is sacred. The Council of Europe presented a preliminary
report in Strasbourg on
massive money laundering by the Vatican. Yet another scandal has emerged for
JPMorgan, as it served as the chief Vatican
bank until the scandal broke. A big mea
culpa in a string of banker sins. JPMorgan
is complicit in money laundering fanned across
Europe, having abetted Vatican flow of high volume funds and fraud. It permitted the rigidly
defined IRS suspicious transactions to pass
through their institution for an eternity.
The financial account in question allegedly
processed more than 1 EUR billion for the
Vatican bank through
year 2011. Italian investigators suspect the
account was used to launder funds from dubious
sources in their words, surely diabolical.
According to the strict laws against the practice,
the large US
criminal banking organization should be considered
a primary suspect in massive money laundering
operations in Europe, centered at the Vatican
bank.

Yet another egregious moral hazard has been committed, with a papal ruling on
whether it is a mortal sin soon to come. Banking
officials at JPM were caught naked in bed
with the pope's temple merchants, the gender
of bedmates soon to be disclosed along with
the sex toys. The dark history is the Vatican
is an age old story. Whether JPM will be implicated
in legal arenas is unclear, as the jurisdiction
might be thorny and the penance lengthy. The
smoking chalice was large wire transfers with
no information regarding account holders or
purposes for the transfers. Involved were
GBP 20 million apparently heading to a Vatican
account at JPMorgan in Frankfurt.
The other EUR 3 million was heading for an
account at a different bank in Rome. John Pierpont Morgan would turn in his grave. See the Silver
Doctors article (CLICK HERE)
and the Der Spiegel article (CLICK HERE).

◄$$$ BANK OF AMERICA IS IMPLICATED IN A
BIG MEXICAN COCAINE RING FOR MONEY LAUNDERING.
NOTHING NEW EXCEPT FOR THE REVELATIONS, THIS
BY THE WALL STREET JOURNAL. NO CHARGES WILL BE LODGED AGAINST THE BANK, VITAL
FOR KEEPING AMERICA STRONG. $$$

A farce of an investigation and prosecution is taking place. The FBI has revealed
that a major Mexican cocaine trafficking
cartel called Los Zetas (The Z's) used accounts
at Bank of America to hide money and invest ill-gotten drug
trade profits in US
race horses. The alleged ties between
the violent drug gang and the second largest
US
bank were described in an affidavit filed
in federal court in Texas in June. A business operating as a front to purchase thoroughbred
horses and to conduct training was created
to launder drug money through Bank of America.
Of course, the Too Big To Fail and amply protected
financial firm, known as Papa Bush's CIA Bank,
is not accused of any wrongdoing. Officials
at BOA are cooperating with authorities in
the case. Expect any fines to be very small
fractions of a penny per dollar processed,
just like all past precedent such as Wachovia
in 2008. Nothing changed, nothing to see,
keep moving along, people. The Fascist Business
Model is at work. See the Wall Street Journal
article (CLICK HERE).

## SHADOW BANKS GIVEN SUNLIGHT

◄$$$ THE INVERTED SHADOW BANKING SYSTEM SIGNALS A QUIET WARNING, THAT
PRICE INFLATION COULD BECOME A NEW ARRIVAL
ON THE SCENE FINALLY. IT ACTUAL BANK DEPOSITS
DOMINATE IN BANKING ONCE AGAIN LIKE IN DECADES
PAST, THEN NEW MONEY CREATION WILL END UP
HAVING THE OLD EFFECT TO CAUSE RISING PRICES.
FOR THE LAST TWO DECADES, THE SHADOW BANKING
SYSTEM HAS DOMINATED. IN RECENT YEARS, THAT
EXPLAINS THE JIST OF MONETARY POLICY. THE
ZERO PERCENT COST OF MONEY IS DESPERATELY
REQUIRED. $$$

An important inflection point occurred in December 1995, one that should have
signaled a path to destruction to come in
the Western banking system, with New
York and London
as its primary axis for ruin. At that time,
liabilities in the US Shadow Banking system
(having no deposit base) for the first time
ever became larger than liabilities held by
traditional financial institutions (with deposit
base). Tyler Durden of Zero Hedge has been
extremely thorough and diligent in covering
the perverse shadow system for over two
years. He contends that this massive and rarely
discussed component of the USEconomy is the
most important one, since monetary policy
is made on the margin to accommodate it. Consider
the need to fund the Interest Rate Swap in
an enviroment of runaway USGovt deficits,
done at zero cost from the indefensible 0%
official FedFunds rate.

The shadow system explains monetary policy. It explains why despite $trillions
in new money having been created electronically,
the flow through into the general economy
has been negligible. Obviously, the bankers
spend their bonus checks on vacations, summer
homes, yachts, lavish clothes, high end restaurants,
and diamonds, for a trickle down benefit.
For a quick look at the many components of
the Shadow Banking system, check out the following
breakdown by Deloitte, which is incomplete
but very illustrative.

The total Shadow Banking liabilities within the United
States alone hit a gargantuan
$21 trillion in March 2008. They are comprised of a combination
of money market funds, GSE & Agency paper,
asset-backed paper, funding corporations,
open market paper, and repos. They have been
on a major decline ever since, holding at
under $15 trillion at end March 2012. This
is a ripe $6 trillion in flow removed from
credit money circulation, with a $143 billion
drop in Q1 alone! It prompts recession
and stagnancy. See the blue line on the chart
below. Since the destructive events in the
summer of 2008, when the subprime mortgage
bond explosions hit the bank balance sheets
(after being contained in the view of hack
Bernanke), not a single increase has been
logged from 16 quarters in the total notional
contained within shadow banking liabilities.
The chart below shows precisely when the credit
bubble popped. The havoc and impact has affected
shadow banking far more than normal credit
transformational conduits. They are hitting
JPMorgan in the last few months in a big way.

The USFed does all it can possibly do to defend against the contraction. It
has opened numerous liquidity facilities to
aid the big US banks, but they are dying anyway
a horrible death. The US
banking system is stuck in sideways mode,
trying desperately to replenish itself with
enabled USTreasury carry trade. For two years
in a row, consolidated US financial liabilities
amount to just shy of $30 trillion and have
barely changed. That explains why the US stock market is stuck in a range. The US
total financial sector is still a huge $3.8
trillion below its all time highs, standing
at $33 trillion. Unless and until this $3.8
trillion hole is plugged, one thing is certain.
Adoption of risk will not take place. The
big bank consolidated liabilities in Q1 declined
by $86.2 billion at a time when the USFed
was engaged in the deceptive program known
as Operation Twist.

Durden calls the shadow banking system an inflation buffer. It performs all
the traditional credit intermediation and
basic transformations that conventional banking
entities ordinarily do, namely manage maturity,
facilitate credit, and provide liquidity.
However, the warning is that without benefit
of deposits, the entire rickety shadow banking
system is built upon the good faith and credit
of re-hypothecated assets, converted into
liabilities, courtesy of fractional reserve
credit structure. What functioned well
in the expansionary phase of the Ponzi in
a leveraging environment, no longer works
when systematic de-leveraging is the order
of the day. The circular aspect of shadow
banking could turn out to be the vortex in
the Black Hole during an economic collapse.

The big danger arises. As the US financial system reverts
to a more conventional system step by step,
the risk that incremental money creation by
the USFed will trigger a serious bout of price
inflation rises exponentially. Increasing
amounts of money find their way into conventional
bank deposit accounts. Consolidated deposits
across the US financial system
currently account for almost $10 trillion,
versus total liabilities of $30 trillion.
As the blue line on shadow bank liabilities
declines lower much more, the advent of price
inflation could arrive once and for all, with
a vengeance. For that to occur, money
velocity must pick up speed, something to
remain a giant challenge. See the Zero Hedge
article, complete with many useful graphs
(CLICK HERE)
to further paint the picture of the shadows.

◄$$$ BIG PROBLEMS ARE BREWING AGAIN IN THE O.T.C. DERIVATIVE MARKET. A
GIGANTIC FINANCIAL ACCOUNTING INVESTIGATION
IS UNDERWAY THAT HAS SEQUESTERED THE MAJORITY
OF TOPLINE EXPERTS. A WALL STREET FIRM IS
IN DEEP TROUBLE. THE STORY IS KEPT UNDER WRAPS,
BUT NOT IN THE ACCOUNTING CIRCLES. ANOTHER
LEHMAN BROTHERS INCIDENT IS SOON TO POP, WHICH
COULD BRING FORWARD A SYSTEMIC CHANGE EVENT.
THINK MORGAN STANLEY. $$$

Jim Sinclair has shared an important commentary. He wrote in late June, "There
is a big problem brewing again in the OTC
derivative market. A major international
financial auditing firm is currently involved
in a massive project on Wall Street that presently
has over 900+ consultants involved, which
is massive and beyond even the size and scope
of the Fannie Mae restatement several years
ago. They are grabbing any senior financial
analyst and software expert that they can
to help this unnamed major Wall Street bank
calculate valuations for a suddenly devaluing
portfolio of Credit Default Obligations that
they have heavily invested in. This auditing
firm is charging nearly double their normal
billing rate and is getting it, no questions
asked." My educated guess is that
Morgan Stanley is on the ropes, facing a death
experience. It could also be that an important
JPMorgan subsidiary is also on the ropes,
possibly closely aligned to their Chief Investment
Office. In all likelihood it is both. Another
Lehman Brothers incident is nigh. This
time, the Wall Street and London City bankers have plenty of time to
prepare, to shore up their weakened walls,
to raid private accounts, to falsify records,
and to orchestrate the event. They might
have been able to exploit the situation by
killing a weaker rival, except they have run
out of rivals to kill. Be sure that Europe
will be blamed for the extreme damage linked
to the event. An imminent event is tied to
the sovereign bond losses and bank losses
in Europe, tha t include France and Germany, but the big fat finger of blame will
eventually be revealed that the USTreasury
Bond complex is breaking. Its Interest Rate
Swap buttresses are fractured and falling
to the ground with unspeakable losses that
could enter the $trillions.

◄$$$ WALL STREET AND LONDON BANKS ARE BEING COERCED TO PRODUCE MORE GOLD, LIKELY FROM PRIVATE
EXECUTIVE ACCOUNTS. A SLOW DEATH MARCH IS
BEING FORCED, A JACKASS THEORY. $$$

The Jackass holds a theory, that gold is loosely
connected to balance sheets of the major banks.
However, that gold is available only from
channels that extend to personal executive
private accounts holding gold. Some are in
bullion banks. Others are in Wall Street and
London
investments and in big money center commercial
banks. A great many bank executives own private
accounts in the Carlyle Group, which has been
in the process of going public in stages.
Back in March 2009, Jim Sinclair with hesitation
revealed at a PDAC conference in Toronto
Canada that bank
executives serve as counter-party to massive
bank short futures positions in the COMEX.
The bankers are invested in gold. Their bank
firms will be gutted, redeemed at government
expense, while the bank leaders own the profitable
long positions.

My theory is that the raids for 6000 tons gold now gone East this spring
has produced extraordinary pressure for the
banks to bring privately held gold from executive
accounts into the banks and financial firms.
If they do not, the banks face a death experience
with full blown failure in the public eye,
complete with lost political power, legal
prosecutions, and long prison sentences. If
the banks do indeed move privately held gold,
then they buy time. The prevailing theme since
2009 has been to buy time. Wall Street is
expert at buying time. They buy time and fix
nothing. The Eastern Coalition realizes the
big banks own plenty of gold, but in private
accounts. To plow under the New
York and London
banks, the Eastern entities must draw out
whatever gold bullion can be produced, almost
to the last bars. The process is excruciating
and slow. So is the Paradigm Shift over power
and wealth moving East. It follows productive
capacity and income from a generation of offshored
industry.

## FOREIGN BANK RUNS

◄$$$ B.N.I. BANK WILL REMAIN SHUT DOWN IN ITALY
UNTIL END JULY. THE PATTERN WILL EMERGE THAT
BANKS SHUTTING DOWN WILL STAY SHUT DOWN MUCH
LONGER THAN ANNOUNCED. THEN MANY WILL PUBLICLY
ANNOUNCE THEIR FAILURE, COMPLETE WITH PRIVATE
ACCOUNT LOSSES. $$$

Bank Network Investments of Italy might provide the model for banker deception
in failure and shutdown. When they shut down
temporarily in mid-June, word was given that
the bank would open again on July 1st. That
date has been pushed back to July 31st. Depositors
are left in the lurch, unsure of their money's
safety, which has probably vanished. The pattern
might be established. Announce a temporary
shutdown, extends the date for reopening,
then string along that date until a bank failure
is announced, with total loss to customer
accounts. The window created enables much
chicanery and shenanigans, like snatching
some accounts, especially black market accounts
but also idle accounts or retail accounts.
The Bankia case in Spain shows how the reality
of financial accounting in time reveals losses
much deeper than originally thought. The accounting
games turn real when nationalization occurs
or when failure is in progress.

◄$$$ ALL POSTBANK AUTOMATIC
TELLER MACHINES IN GERMANY HAVE STOPPED DISPENSING
CASH. IT IS THE NATION'S BIGGEST RETAIL BANK.
THE GREEK AND SOUTHERN EUROPE BOND CRISIS
HAS SPREAD ITS ILLIQUID TENTACLES TO GERMANY FINALLY. $$$

Deutsche Postbank is a German retail bank with headquarters in Bonn.
Postbank was formed from the demerger of the
postal savings division of Deutsche Bundespost
in 1990. It became a wholly owned subsidiary
of Deutsche Post in 1999, and was partially
spun out on the Frankfurt Stock Exchange in
2004. Deutsche Post retained a controlling
stake of 50% plus one share until September
2008, when 30% of it was sold to Deutsche
Bank for EUR 2.8 billion. Let that serve as
background for a bank not well known outside
Central Europe. Although not in the news yet, my Central European banker
source shared the information. He wrote, "Just
getting word from Germany that no Postbank ATMs work. It is one
of the biggest retail banks. It is a total
system freeze. The scheiss is hitting the
fan bigtime now." To be weak, illiquid,
and damaged, a bank must not necessarily be
located in Southern Europe.
Add Germany
to the list of nations that include Spain,
Italy, France,
and Great
Britain. It can simply
have a balance sheet that touches the South.
The contagion is spreading for bank holiday.
When it occurs, the losses to customer accounts
will be incalculable in a very real sense.
Civil disorder will result.

◄$$$ MANY DETAILS ON THE RBS-GROUP PROBLEMS WITH SUPPOSED GLITCHES HAVE
COME TO LIGHT. MUCH ATTENTION WAS GIVEN TO
NORTHERN
IRELAND, THE COLONY.
IT WAS A KITING SCHEME THAT SAVED THEM GBP
73 BILLION. JAMMED A.T.MACHINES AND FOOT DRAGGING
WERE THE UNSAVORY SOLUTION. THE DECEPTION
MAKES FOR A GOOD STORY AND CLEVER FRONT. IT
WAS A HALTED BANK RUN, ONE TO BE REPEATED.
THE HEADQUARTERS INTERRUPTED THE BANK RUN
WITH SOFTWARE. $$$

The Royal Bank of Scotland committed a clever
kiting game late last month. They froze money
in movement, and permit the standard flow
to overcome the backup in system. Some types
have been delayed by a few months, like with
purchase orders processing. The Slog (intrepid
analyst) long ago identified RBS Group as
the leading wobbly UK banking consortium. The
atmosphere inside RBS is especially unusual
for its open desperation. The Slog has been
downright diligent and dutiful in airing grievances
by suppliers and customers. The trail is littered
with stories of foot dragging, delay tactics,
and other methods that attempt to hide a condition
deeply insolvent and illiquid. Either the
bank lower officers are a legion of incompetent
paper pushers, or else the bank conglomerate
is in illiquid tattered ruins. The obvious
conclusion is ruin, on the brink of open breakdown
and failure. The forensic layout is stark
and clear. Income in March 2012 was down almost
GBP 1 billion year year over year. Credit
adjustment losses quadrupled over the same
period, an accounting gimmick that does not
address liquidity. The corporate loss before
tax was ten times higher than a year ago.
Daily statements showed RBS cash assets to
stand at GBP 82 billion, whereas net loans
were recorded as GBP 476 billion. It adds
up to big stress.

Here might be the clincher to give away their game. Total deposits came in at
GBP 476B, the exact amount as loans. The stated
difference between total assets and total
liabilities was around plus GBP 60B. Two factors
could easily tip the balance in a harsh way.
The delays in toxic asset writeoffs within
the entire RBS Group could be catching
up to them, especially with pressures to deleverage
and meet reserve demands with Basel III. Also,
a public rush to grab their accounts in
cash following a formal debt downgrade
would gobble up the net difference rapidly,
given how enormous the client base is. The
RBS Group is the largest retail bank chain
in Great
Britain. With total fluid
assets standing at around GBP 930B, zero outgoings
over five days under the thin cover of an
ATM computer glitch would give the bank a
GBP 73B gain in liquidity flow, plenty sufficient
to defend against an illiquidity storm. It
was a pathetic excuse but an effective ploy.
As for restoring creditor confidence, that
is a much harder task. The European public
is witnessing a defensive measure of extreme
nature but a effective tactic to prevent a
bank run.

The Slog opened up his Roost weblog for entering private and business user comments,
to shed light on the game RBS has been playing.
The results are striking and consistent. The
overwhelming finding is that problems in RBS
go far beyond pure technical snafus. Rather
than provide quotes, the messages are conveyed.
Check the link in reference for the full commentary.
The Ulster Bank has been guilty of extreme
delays that go beyond unprofessional. They
put clients through runarounds on purchase
orders and invoice payments for work that
dates back to February. Requests for added
data and endless minor corrections are the
tactic. A deliberate policy of holding back
payments to suppliers is evident. Excuses
for non-payment have grown sillier by the
day at NatWest, in some cases where insurance
limits are almost hit. Rival banks are making
direct inquiries to make a grab at customers.

RBS/NatWest in some cases allowed days to pass between commitment for payment
made, but not payment received. Problems resulted,
as shipments were held back. The streamline
payments were not being processed on time.
The transactions are not clearing properly,
as partials were cleared rather than full
payments. Customers at Ulster Bank who play
close to the vest on maintaining positive
accounts are seeing more orders bounce unpaid
for insufficient funds. They conclude an acute
cashflow problem at the bank in aggregate.
An RBS automatic teller machine in Manchester dispensed very old 5 pound notes with a restriction of only
50 pounds on the withdrawal. When RBS officials
claim they debugged the technical glitch,
yet normal service is not restored for over
48 hours, then one can conclude the problem
goes far beyond the IT department, and smacks
of backup issues and illiquidity. Since most
of the bank's IT folks are competent, the
problem is obviously that too many balls are
in play, with liquidity pressures everywhere.

The RBS Group has taken measures to placate its customers. Overdraft fees and
charges were waived on accounts kept current.
Open hours at the 1200 branches at member
banks from NatWest, RBS, and Ulster Bank across
the United Kingdom
and Northern
Ireland were extended,
even on a Sunday for the first time. No
reasonable explanations for the supposed glitch
have been offered. The fact that all the
access problems occurred immediately following
a major debt downgrade for RBS points the
finger at a bank run, illiquid conditions
causing problems, and a bank reaction to stymy
its customers, thus removing access to their
cash. It was a halted bank run that could
have gone out of control. The nasty reality
of bank runs is that confidence is not restored
afterwards, and the events are repeated. In
this case, the cash flow savings overcame
the illiquidity challenge and easily covered
the generous measures to deal with angy frustrated
customers. See the Slog Blog (CLICK HERE).

◄$$$ RUSSIA'S LARGEST BANK HAS
HALTED CREDIT CARD AND DEBIT CARD FUNCTIONS.
THE BANK HAS $332 BILLION IN ASSETS. THE BANK
CONTAGION ON ILLIQUIDITY HAS MOVED EAST OF
EUROPE. THE CRUDE OIL PRICE COULD BE A PROXIMAL CAUSE. $$$

Sberbank of Russia has suspended credit and debit card operations due to a technical
malfunction, the bank told Interfax. No cards
are being serviced, according to an official
statement. The bank is not well known outside
Russia.
Its asset base is almost three times greater
than its second position rival VTB Bank, $332
billion versus $127 billion. The better known
Gazprom Bank holds $75.5 billion in assets.
One must wonder if the lower crude oil price
has placed strains across the entire Russian
financial system, reducing liquidity flow.
See the Zero Hedge article (CLICK HERE)

## COORDINATED CENTRAL BANKS DESPERATION

◄$$$ THREE CENTRAL BANKS TOOL ACTION IN A BIG SIGN OF ALARM. WORLD CENTRAL
BANKS ARE TURNING DESPERATE AT THE SAME TIME,
DENYING THEIR COORDINATED ACTIONS. THEY HAVE
NO TOOLS LEFT. THEY ARE ALL STUCK IN THE 0%
PAINTED CORNER. TIME HAS RUN OUT, AS THE FINANCIAL
SYSTEM IS IMPLODING. ANOTHER UGLY SYMPTOM
HAS RISEN, MARGIN CALLS AT THE EURO ENTRAL
BANK. $$$

China, the EuroZone, and Britain
loosened monetary policy in the space of less
than an hour on July 5th. The signal is powerfully
clear, that a growing level of alarm about
the global economy is noted. They went out
of their way to deny coordinated action which
was obvious. The only surprise move was from
Beijing, with a lending rate reduction of
31 basis points to 6.0% following an interest
rate cut only a month ago of equal surprise.

The Euro Central Bank cut rates to a record low 0.75% following a dire run of
economic data, the cut being 75 basis points.
The central bank holds implicitly to the notion
that cheaper money will pull the system out
of insolvency, a lunatic and errant notion
proved false in the last four years. They
announced no new bond purchase plans or renewed
bank liquidity programs. No monetary action
taken has resulted in a single improvement
on the continent, as the banks implode and
the sovereign bonds remain toxic in the South.

A plainly visibly signpost has been written to reflect the failure of the Euro
Central Bank policies and practices. The Jackass
has been plain in describing the Long-Term
Refinance Operation credit line as an utter
failure, calling it the Draghi Stillborn Baby.
If cheaper credit, if relaxed collateral standards,
if amplified liquidity flow were at all solutions,
then the margin calls on European banks would
not occur. In the last week, the EuroCB
official margin calls surged by the most seen
in over nine months. It is the worst burst
since the last Greek heart attack. Sovereign
bond yields have risen in recent weeks, pulling
down principal prices. Therefore collateral
used at the ECB window has dwindled. Banks
have been forced to find cash to cover margin
calls. Tremendous pressure has returned to
the big Euro banks, as renewed liquidity stress
is placed once more on strapped European banks
lacking cash. Considering negative Swiss interest
rates, scrutiny to LIBOR rates, stressed swaps,
and rising ECB margin calls, conditions
are going from bad to worse behind the curtains
in Europe.

The Bank of England oversees an official rate at a record low 0.5% already.
They will stay put on rates. However, the
BOE will rev up the monetary ramps to purchase
GBP 50 billion (=US$78 bn) of assets with
newly created money. The Bank of England
has already created GBP 325 billion of new
money, until the decision. The result has
driven borrowing costs to record lows, but
with the UK Economy stuck languishing in recession.
They believe big bond buys will help the economy
out of recession even though the past four
years of similar actions have not. Given
the Chinese rate cut action, it is clear the
central banks are attempting to act in unison.
Perhaps by a unified action, the collective
response will be a kickstart of the global
economy. However, liquidity and cheaper
money do not alleviate the pervasive insolvent
condition. Bank analysts remain optimistic
that this QE will bring results when the last
several have not. That is a manifestation
of insanity in the view of psychologists.

Mark Williams is an economist at Capital Economics in London.
He said, "It is a surprise that they
are moving so quickly. It shows that policymakers
concerns about the global economy have only
grown. Policymakers may have felt that cutting
rates on the day that the ECB did the same
would deliver a bigger impact, encouraging
talk of a coordinated response to the slowdown
in the global economy. Again, though, this
might simply underline the seriousness of
the downside risks." See the Reuters
article (CLICK HERE).
Another perspective is that unified policy
action might remove from the equation any
rising movement in one currency versus the
others. The Competing Currency War could be
avoided by coordination.

◄$$$ THE USFED DECIDED TO EXTEND OPERATION TWIST THROUGH 2012, AND PROMISED
TO KEEP THE 0% RATE INTO YEAR 2015 INCREDIBLY.
THE SMELL OF PURE DESPERATION AMIDST FAILURE
AND SCORCED EARTH IS PLAINLY EVIDENT TO THE
SENSES. $$$

The US Federal Reserve confirmed extreme concern over the USEconomy. It will
extend a program where they publicly state
a formal shift in USTreasury Bond holdings
toward longer-term securities through the
end of the year. The move is deceptive, since
it conceals vast bond monetization purchases
and foreign bond redemptions. The USFed made
a meaningless comment that it stands prepared
to take further action, when they can do next
to nothing except purchase the bulk of USTreasury
auctions and redeem foreign bonds en masse.
No new QE program has been announced, since
it never ended. The deception of the bond
world continues. The 0% official FedFunds
rate is the cause of much economic deterioration,
yet they cannot admit so. The point of capital
destruction has been made on numerous occasions
within the Hat Trick Letter reports. The
USFed has reiterated since January that it
plans to keep short-term interest rates at
exceptionally low levels (as in 0%) at least
through late 2014. The promise into year
2015 is a definitive signal of central bank
failure in monetary policy, and utter desperation
to keep the banks afloat with the USTreasury
carry trade. Notwithstanding, the USFed
must continue to feed the Interest Rate Swap
engine that enforces the 0% short-term
and sub-2% long-term USTreausury Bill and
USTreasury Bond yields. Doing so with annual
$1.5 trillion deficits to finance among a
scarce group of creditors takes hard work,
especially when the mantra of a Flight to
Safety is sung to the investment community.
Yes, 1984 is here firmly in place, seemingly
forever.

The USFed opted to extend Operation Twist, a program under which the central
bank strives to lower long-term interest rates
by selling shorter-term bonds and using the
funds to buy longer-term bonds. Announced
in September 2011, the program was scheduled
to conclude at the end of June. Under the
extension of Operation Twist, the USFed anticipates
buying and selling about $267 billion in USTreasurys.
The USFed made some observations that
cause outward worry. They acknowledge the
jobless rise, and that household spending
is slower. They talk about the growth expanding
in moderation ad nauseum, like Mr Magoo, in
complete divorce from reality. They celebrated
the reduced energy costs. Economic degradation
will produce such deadly benefits. See the
Truth in Gold article by Dave in Denver, an astute analyst (CLICK HERE)
to learn more about how Operation Twist is
a disguised Quantitative Easing.

The official USFed statement reads, "NY Fed was directed to purchase
Treasury securities with remaining maturities
of 6 years to 30 years and to sell or redeem
an equal par value of Treasury securities
with remaining maturities of approximately
three years or less. The continuation of
the maturity extension program will proceed
at the current pace and result in the purchase,
as well as the sale and redemption, of about
$267B in Treasury securities by the end of
2012. The FOMC also directed the Desk
to continue reinvesting principal payments
from its holdings of agency debt and agency
mortgage backed securities in agency MBS,
and to suspend, for the duration of the maturity
extension program, rolling over maturing Treasury
securities into new issues at auction."
The statement reeks with failure and lack
of alternatives.

◄$$$ FRANCE HAS JOINED GERMANY,
SWITZERLAND,
AND THE UNITED STATES IN SELLING BONDS WITH
NEGATIVE SHORT-TERM YIELD. THE SUB-ZERO CLUB
ADMITS A NEW ASHAMED MEMBER. THE CENTRAL BANKS
ARE AIDING AND ABETTING NATIONS IN REMOVING
CAPITAL FROM PRODUCTIVE SOURCES. THE BONDS
SOAK UP CAPITAL FROM THE SYSTEM IN TRUE PARASITIC
MANNER. CRITICS CLAIMING GOLD PAYS NO YIELD
SHOULD PAY CLOSE ATTENTION TO THE BOND PERVERSIONS.
$$$

Over the past few months Germany, Switzerland,
and the United
States have sold bonds
with negative yields, meaning that investors
are in effect paying to safeguard their capital.
When Japan carried negative yields, they were criticized
as running a carnival sideshow in the credit
market. Nowadays, not only is the Japanese
style ZIRP adopted, but negative bond yields
are spreading like weeds in the West.
The latest entry is France, selling bonds at negative
interest rate. How absurd. The spin is that
it shows investor confidence in the French
Govt despite concerns about their debts and
wider EuroZone instability. Better reality
would state that investors fear bank runs
and lost accounts. Investors have flocked
to the perceived safety of larger European
economies. Analysts point to the understandable
perceived security of Swiss, German, or even
US bonds offering negative yields. But
French Govt Bonds seem a higher risk, given
the socialist leadership and promises to raise
taxes and to increase federal spending.

The nation of France is a PIGS nation with
borrowed German robes, with rickety bone structure
obscured. The economic impact of negative
interest rates is perverse. Capital placed
in such bonds actually shrinks over time,
thus a negative contribution to economic growth.
It is a parastic central bank practice. But
then again, so has been taking supposed Excess
Bank Reserves by the USFed and offering a
yield. The effect was to pull the capital
out of the big US banks, which was actually
Loan Loss Reserves, nothing more. Think drainage.

For gold the implications of the trend towards sub-zero
interest rates are ironic and encouraging
for precious metals advocates. A distortive complaint against Gold has always been that it does not pay a
yield. It actually does, from selling option
calls, a common practice. Let's make the
complaint against supposedly secure Western
sovereign bonds from the big stable nations
is that they do not pay a yield, in fact cost
money. The fast rising deficits across
the Western landscape assure a profound gigantic
monetary inflation trend to continue for years.
Additions to the monetary base will come from
the government sectors. The end result for
Gold is that despite the confusion and chicanery,
the bond trend is wildly bullish upon against
the zero percent wall. Some wonder if the
end to fractional banking is near. The Jackass
expects a new global banking system to come
when the USDollar and fiat currency system
finishes its assured implosion. The new system
will be driven by trade settlement, done with
gold-based trade financial vehicles. The brisk
growth in swap facilities between nations
is the basis foundation for a new barter system.
See the Dollar Collapse article (CLICK HERE).
Credit to the Intl Herald Tribune.

## ENDGAME HEARTBEATS

◄$$$ KEY UPDATE FROM THE HIGH SUMMIT.
LOOK FOR A NEW WAR FRONT, LOST INFLUENCE IN
LATIN AMERICA, AND A
POWERFUL LAUNCHED GOLD PRICE BUT NOT BEFORE
A PRICE SCARE FROM A FINAL SWOON. $$$

The Jackass received an update two weeks ago from the friend of friend with
direct contact to a high level man with solid
connections to a powerful Eastern Coalition
family. He is the real deal, as numerous stories
check out accurately, and a curious overlap
is evident with other reliable sources. The
passed report was like a fresh burst of dragon
breath but from a beneficent chamber. Here
is what they perceive and expect.

The USGovt will attempt with all efforts to cause a war
before September 21st, in order to impose
a crisis atmosphere for the election so that
the public will rally around the president,
but with a secondary motive to censor the
internet. However, they expect it to backfire
in a big way, much worse than the Iran SWIFT
episode. My doubt consistently of a spreading
war to engulf Iran has been correct, as
cooler heads prevail and as a certain ally
nation chooses not be face anihilation. But
this administration is far more determined
to retain power during a fierce recession,
financial degradation, and foreign political
rebellion. The United
States has lost influence
in all Latin America,
growing worse by the month in open manner.
The substantiation was glaring from the OAS
summit in Cartagena Colombia during April. The new players in influence
are China
and Russia
in the region. Certain highly powerful and
influenial Eastern entities no longer have
any tolerance for the United States to remain
a union of 50 states with federal glue. It
is not hard to read between the lines for
5 or 6 tribunal territories as their objective.

The surprise on the future Eastern glimpse was their
expectation for Gold & Silver to likely
decline by 20% in price before both rise at
least by 5-fold and possibly as much as 10-fold
in price. The final swoon is expected for shaking
up the Anglo bankers (gold raid) which will
toss off many investors in disgust and dismay.
The preliminary decline will scare the piss
out of the entire gold community and cause
widespread disillusionment, even fractures.
The Eastern Coalition will exploit the opportunity
to drain the last of the Western inventory
and render the bankers bloodless. The price
decline will result in part from combined
events of Euro currency collapse from the
sovereign bond contagion and US derivative breakdown centered
upon Interest Rate Swaps and Credit Default
Swaps. They expect the Western banking system
to implode on its own without any help from
the East except for deep damage rendered the
gold removals.

◄$$$ GREG HUNTER OF USA-WATCHDOG INTERVIEWED KUNSTLER, WHO EXPECTS A DISORDERLY
RESOLUTION TO THE BROKEN GLOBAL BANKING SYSTEM.
HE EXPECTS A LOWER STANDARD OF LIVING TO FOLLOW.
$$$

Greg Hunter of USA Watchdog interviewed James Howard Kunstler. He is an irreverant
no-nonsense analyst with deep insight and
keen cutting style. He shared where he thought
the world was heading, basically to a lower
standard of living and more hardship. He openly
wondered how disorderly the adjustment process
will be. My belief is that Paradigm Shift
is under way, and it will be the most disruptive
event since World War II. Already the global
financial crisis is called the most devastating
event since the Great Depression. The world
will be very fortunate to avoid a wide hot
war, since the US & British will not go
quietly into the night. Their empire has fizzled
in grotesque insolvency and debt saturation,
burdened by questionable wars that demand
salutes at public events before the national
eye. Kunstler believes a difficult resolution
will come from the broken global banking system.
The world powers in his opinion are attempting
to conceal the broken condition. See the interview
clip (CLICK HERE)

◄$$$ MOODYS DOWNGRADED A SLEW OF US-BASED AND LONDON
BANKS IN A MASSIVE SKEWER. THE MASSACRE HAS
BEGUN, NO MORE FAVORITISM WITH EUROPEAN BANKS
TARGETED. MORGAN STANLEY WAS GIVEN A DOUBLE
DOWNGRADE, NOT THE FULL TRIPLE FOREWARNED.
THEY SURELY INTIMIDATED MOODYS, OR BRIBED
THEM. $$$

Moodys finally delivered a grand bombshell, showing courage. The other two rating
agencies, Standard & Poors and Fitch,
appear to be cowardly bowing before Wall Street
and London bankers, kissing their rings. As most bank analysts will recite,
unless all three rating agencies follow suit
and deliver similar blows, or at least two
of the three agencies, the full impact will
be muted in their operations. Nevertheless,
the impact from the Moodys multiple downgrade
has been sullen and simmering. Ratings
agency Moodys downgraded the long-term credit
ratings of 15 major banks in the United States, Canada,
and Europe. None
of the gaggle of banks was hit harder than
the forewarning given by the agency, when
it placed them on review in February. The
action will likely force many of the banks
targeted to post additional collateral against
asset positions held on their balance sheets.
A summary of the major ratings action taken
is given. The worst action was slapped at
Credit Suisse, downgraded to (P)A2 from (P)Aa2,
a nasty insult of shame. The most brutal downgrades
to B grade involved the big US banks plus RBS in London, a bold move.

Cut One Notch:

HSBC downgraded to Aa3 from Aa2

Lloyds TSB downgraded to A2 from A1

RBS downgraded to Baa1 from A3

Societe Generale downgraded to A2 from A1

Nomura and Macquarie downgraded by one level each,
to Baa3 and A2 (but action to be taken earlier)

Cut Two Notches:

Bank of America downgraded to Baa2 from Baa1

BNP Paribas downgraded to A2 from Aa3

Barclays downgraded to A3 from A1

Citigroup downgraded to Baa2 from A3

Credit Agricole downgraded to to A2 from Aa3

Goldman Sachs downgraded to A3 from A1

JPMorgan Chase downgraded to A2 from Aa3

Morgan Stanley downgraded to Baa1 from A2

RBC downgraded to Aa3 from Aa1

UBS downgraded to A2 from Aa3.

In typical perverse fashion, the Wall Street crowd took the news of a double
downgrade to Morgan Stanley as positive news,
since it had been placed on review for a downgrade
by as much as three levels. The impact would
have been severe, thus the reprieve (maybe
the benefit of bribery and intimidation).
Analysts estimated that Morgan Stanley
could have been subject to post more than
$5 billion in additional collateral if hit
by a downgrade to Baa2, a full three notches.
In a short statement afterwards, Morgan formally
stated it had made clear progress, particularly
with its Mitsubishi UFJ partnership. Rubbish.
Most of their actions had been taken before
February. Putting together more internal review
staff does not change the ruinous insolvency
and wreckage from derivative monsters lurking
inside their house. It is like claiming improvement
over an acid vat by simply having two more
officials standing watch over the cauldron.
See the Business Insider article (CLICK HERE).

◄$$$ MORE QUESTIONS THAN ANSWERS COME TO MIND WHEN EXAMINING THE COURSE
OF RECENT EVENTS. THE PAST PATTERN OF CONTROLLING
THE SYSTEM BY THE BANK CARTEL APPEARS TO BE
ENDING. EITHER THE BROKEN SYSTEM HAS ELEMENTS
COMING TO THE SURFACE IN A NATURAL PROGRESSION,
OR ELSE THE RULES CAN NO LONGER BE BENT TO
FAVOR THE CRIMINAL BANKER CLASS. THE JACKASS
SUSPECTS BOTH FACTORS AT WORK. $$$

The questions stack up, all difficult to answer. Who is investigating JPM and
Citi for LIBOR infractions? JPM and Citibank
and GSax are the system! On what higher authority
is the investigation being done? Who forced
Barclays into the open for LIBOR violations?
Better yet, who forced the London Financial
Authority to force Barclays into the harsh
light? Why could JPMorgan not simply hide
its derivative losses, shove them under the
rug, and tell the regulators to go to hell
like they usually do? JPM can always rely
upon national security for their deviant accounting.
Who is forcing cartel banks into shedding
their gold bullion to satisfy margin calls,
when stuck in insolvent condition, all done
in off-market transactions? Why is not cash
acceptable, like off a Printing Pre$$? Howcome
Interpol is taking orders from a hidden entity
to enforce the law, when the narco drug money
available from the USGovt agencies could buy
them off? An ethics change appears at work.
Is the world dividing into $trillionaire good
versus $trillionaire evil with the Western
financial centers the axis of monetary evil?
Are arrest warrants really sitting on a high
level desk to be served against dozens of
New
York and London bank executives? Who will
finally serve those warrants?

Are the vast $trillion role programs in deep fraud by the Bank of England and
USDept Treasury finally going to be exposed?
Will the fate of fraud schemes like the Madoff
Fund be revealed, no longer protected? Will
the Western financial system actually implode
with a benign neglect hand held over the mess?
Will deep systemic secrets be revealed from
the World War II? Recall that the victors
always write the latest chapter in history.
My favorite heart-felt desire is for legitimate
forthright revelations to come for the most
serious damage to the US nation in modern history,
the 911 attack in 2001. Will it be exposed?

The Jackass does not have firm answers to any of the above questions. But they
are not rhetorical questions. The mere arrival
of so many important questions seems to indicate
a significant change in the world winds. In
the last three months, great encouragement
has come from a few sources, all of which
appear to overlap and coincide nicely, never
in full confirmation. Numerous hints and veiled
confirmations come from my corners that a
new global sheriff has arrived, is taking
prisoners, is disrupting the balance of power,
is hiring Interpol to do its tough tasks,
and is planning for a harmonious world. The
hold justice in high regard, unlike the current
Western regimes. My hope and prayers are with
them.

◄$$$ F.O.F.O.A. INTERVIEW IS REVEALING. THE WELL KNOWN FRIEND OF A FRIEND
OF ANOTHER PERMITTED A RARE INTERVIEW. HE
INDIRECTLY ANTICIPATES TWO HIGHLY DISRUPTIVE
EVENTS TO OCCUR WHICH WILL CAUSE THE USDOLLAR
TO LOSE ITS STANDING. HE POINTS TO PRICE INFLATION
AND A GOLD MARKET FAILURE TO DELIVER. THE
RESULT WILL BE AN EXTREME MONETARY EVENT THAT
USHERS IN GREAT CONFUSION. $$$

"It
is impossible to predict the exact pin that
will pop the [USDollar confidence] bubble
in a world full of pins, but I have an idea
that it will be one of two things. I think
the two most likely proximate triggers to
a catastrophic loss of confidence are a
major failure in the London
gold market, or the US government's response to
an unexpected budget crisis due to consumer
price inflation. Most people who expect a
catastrophic loss of confidence in the dollar
seem to think it will begin in the financial
markets, like a stock market crash or a Treasury
auction failure or something like that. But
I think it is more likely to come from where,
as I like to say, the rubber meets the road.
And here I am talking about what connects
the monetary world to the physical world:
prices. I think these worlds are connected
in two ways. The first is the general price
level of goods and services and the second
is the price of gold. If one of these
two connections is broken by a failure to
deliver the real world items at the financial
system prices, then we suddenly have a real
problem with the monetary side. So I think
it will be a relatively quick and catastrophic
event, but maybe not as dramatic as a
major stock market crash. It will be confusing
to most of the pundits as to what it really
means, so it will take a little while for
reality to sink in."

◄$$$ GIVEN THAT THE BREAKDOWN IS IN A STRONG MIDDLE GEAR, NUMEROUS MESSAGES
HAVE COME FROM MY BEST SOURCE OF INFORMATION.
HE HAS STRONG TIES TO THE GOLD MARKET AND
THE EUROPEAN BANKING WORLD. HIS OPINIONS ARE
MANY AND VERY ENLIGHTENING. NOT ONE OF HIS
INSIGHTS ON MAJOR EVENTS HAS BEEN FOUND TO
BE ERRANT IN FOUR YEARS. IN 2010 HE EXPECTED
THE BREAKDOWN TO COME AND TO GATHER GREAT
SPEED, BUT NOT FOR A COUPLE YEARS. THAT IS
NOW. HE MENTIONED THAT IN MAY, A GREAT WRENCH
HAD BEEN TOSSED INTO THE JPMORGAN MACHINERY
THAT WOULD LEAD TO A COLLAPSE OF THE USTBOND
AND ITS DERIVATIVE BUTTRESS. THE EVENTS CONTINUE.
HERE ARE SOME KEY ITEMS TO HIS MESSAGES, ORGANIZED
BY THEME, HIS THOUGHTS, HIS WORDS, MINOR EDITS
PLACED TO FLOW WELL. $$$

A Paradigm Shift is in progress that defies perception in established ways.
The bankers who wrecked the system by opposing
the free markets falsely thought they would
always be in control. Wrong! The bank rescues
to date are like a big bucket to scoop water
out of the Titanic flooded lower chambers,
a futile exercise. The events to date have
ripped out the entire bottom hull from the
financial market, keeping the analog. The
only lifeboats have labels that indicate hard
assets, the self-re-pricing assets such as
precious metal, valuable commodities, agro/forestry/fishery
and essential commercial real estate, all
located in non over-regulated and confiscatory
jurisdictions in the West. The Hong
Kong territory is one of the safest places
to store your assets. A total collapse
is urgently needed, to remove from power the
few who rig the system for their advantage.
The implosion is already happening but not
yet seen by the general public. An event
driven scenario is in progress, but it is
anyone's guess what will trigger the final
outcome. The infighting at the round table
at the very top already draws blood. Precious
metal and agricultural assets are key to survival.

Hardly any investment grade Gold remains available in
larger quantities. Good quantities are left at Scotiabank in Toronto,
which is a sitting duck that can be drained
only during the final act. Persian Gold is
being reprocessed in very large quantities
in Turkey,
given new markings, then sold to major buyers
in Asia and the Middle
East. The Swiss depositories are mostly
cleaned out except for segregated vaults where
governments are holding substantial quantities.
However, no one trusts the Swiss banks any
longer and those depositories will soon be
cleaned out. In just 20 to 25 years, the Swiss
have lost their historical and coveted integrity.
Depending on the situation of the seller,
premiums are being paid but some closings
are done at spot prices. The physical metal
will survive and rule royally, whereas all
paper will decay and blow away. We are indeed
entering a golden age.

The Euro currency is dead and so is the USDollar. The Euro is running on fumes, while the USDollar enjoys a erection in the morgue.
We are at the end of an era, just like when
the Iron Curtain fell with an event of smaller
scale. The European deal making is absurd
theater, where all that ever comes from Brussels summits is well fed and well liquored
participants coming out of luxury dining rooms.
We shall see precious metal prices in today's
US$ terms go through the roof not before long.
Silver will rise to $500 per oz and Gold
to $10,000 per oz. These could be conservative
projections. The means to control the precious
metals prices is gradually disappearing with
their forfeited metal. A critical point will
be soon reached where the cartel can no longer
control the price. The stage they stand on
will not tilt, but rather collapse from a
lost foundation used to manipulate prices.
On the other hand, crude oil could be on its
way to $50 per barrel. The big oil producers
are already sweating blood and shitting bricks.
As mentioned previously, Germany,
Holland, Finland,
and Austria
are the nations calling the shots in a well
choreographed sequence whose outcome was agreed
upon in April 2010. The events are happening
as planned.

My line of query was directed at the Evil Camp to unleash a new chapter nightmare,
not to permit white light, fresh breeze, and
cleanup to come so neatly. My suspicion is
that the Boyz will attempt to destroy much
of the world, rather than turn over control
and face criminal prosecution, or endure vanishing
acts by the new captains. My expectation is
that the bankers will turn on each other,
the survival of a few stronger or more connected
or more involved could likely depend upon
eating and devouring some weaker rivals and
then putting blame on them in the aftermath.

He responded. These banksters are very naļve, easily being pushed onto their
own sword. They have been busy shoveling themselves
as excrement. The strategy of divide and conquer
always succeeds. The real powerful people
are going to play Cowboys & Indians with
the United States next, where the entire US
will act as the Indian victims this time.
It will not be funny at all, this global counter-attack
to bring an end to financial tyranny. Some
executives from the powerful banks are running
for the exit to cut deals before all comes
crashing down. The lid on corruption has blown
off, finally visible. The system has already
cratered big time, having been broken over
two years ago. The news came that ex-CEO Bob
Diamond from Barclays would forgo up to $31
million in deferred bonuses. He predicted
the blocked bonus four days before it became
news. He believes Diamond bought some time
and probably will not go to prison in Europe.
But as a US
citizen and passport holder, he will likely
be prosecuted by the US authorities. He might see jail time, unless
he dies from an accident in order to protect
his family. Plenty of precedent there.

The shock waves only now are reaching the surface, after much effort to contain
the damage. The old system is broken beyond
repair but the new system has not been launched
yet. The old system must first be wrecked
to the ground in totality, in order to assure
no migration of old Boyz from the old system
to the new system. They must be isolated
and dealt with. The sequence of events appears
to be a slow motion implosion, but the process
is actually unfolding with lightning speed.
Most people cannot comprehend what is happening,
as they tend to come to the wrong conclusions
from patterned thinking that no longer is
relevant. The Jackass belief is that deeply
rooted wrong-footed assumptions interfere
with the mental processing of events, like
beliefs that my government is basically good,
our leaders have our interests in mind and
strive to keep us safe, the military protects
our nation, and respect for private assets
is a constant. Wrong, wrong, wrong!

The damage done to the customers in the entire banking community from this market
rigging scheme goes in to the $trillions.
Little Metzler Bank of Germany is putting
a telephone pole up Deutsche Bank's rectum
in the LIBOR fraud, decorated with razor wire.
Expect to see the big banks taken down now
one after the other. The D-Bank CEO Ackerman
has already been dismissed. American banker
CEOs are next. The blowback from this scam
is so big that the damages could be incalculable.
In fact, the resolution could force a global
war, which cannot be ruled out any longer.
When one pillar at a time is removed from
big buildings, an event drive scenario is
triggered. The buildings are all connected
by vast cable systems.

A religious element is laced within the European crisis. The Northerners (Germans,
Dutch, and Finns) have strong resolve, marching
in lockstep. These Northerners are all Protestants
whereas the Club Med legion are all Catholics.
The EU leaders are Catholics, some associated
with secret societies and pedophile rituals.
Many century old and deep rooted resentments
and animosities underneath that are boiling
with big bubbles to the surface during the
ongoing crisis. If sufficiently frustrated,
a internal war in Europe
could occur, since the players are bellicose
people. The Northerners are freedom loving,
strong willed people and fierce warriors.
Recall the Battle of Varus in northern Germany where a few legions of the Roman Army
were annihilated (SEE LINK).

The key to the next chapter is a growing alliance between
Russia
and Germany. All pipelines coming from Russia
end in Germany.
The largest roll-on & roll-off rail facility
is in the port of Finofort in Germany
on the Baltic Sea. The North Stream pipeline is going from Russia, across the bottom of the Baltic Sea, all
the way to Germany,
where it terminates at Lublin.
The rail network from China
passes through Russia
and on to Germany.
An entire network of rail systems is being
fixed for heavy duty rail transport. Test
runs have been successfully concluded. Chinese
and Russian companies have been buying up
the majority of former East German airfields,
where heavy lift cargo planes come in every
day to deliver good to large scale industrial
facilities, destined for making finish products
and distribution in the EU. An important
point is that German obtains from Russia its raw materials including metals and
energy. It is not the Middle
East, and therefore the strategic thinking
is not skewed. The open trade is brisk. The
German foreign policy is not written by a
small nation on the Southern
Mediterranean.

In order that nobody believe this intriguing man to be perfect, he has had only
one error in his view of unfolding events.
A great many events have occurred, with clear
forewarning by him and his expansive team,
events unfolding much as he expected. Events
where decisions were made have been shared,
which shine a light on the path of events
to come. In the summer of 2009, he expected
an imminent powerful upward move in the price
of Gold & Silver during the yearend holiday
season. Instead, it occurred one year later,
exactly in magnitude as described but with
a time lag. A very forgivable faux pas by
a brilliant, connected, and generous man.
We lock horns on certain matters, but they
are minor and pertain more to style. He has
my greatest respect and gratitude. His shared
views have helped hundreds of Hat Trick Letter
readers to comprehend the unfolding events
with less confusion harbored. He has helped
many to enjoy financial reward. The future
reward will be an order of magnitude larger.